The SEC Allows Jump Crypto to Submit Information in Confidence

The SEC Allows Jump Crypto to Submit Information in Confidence

In an ongoing case against Terraform Labs, a US court has ruled that Jump Crypto, identified as a “third party,” will be allowed to submit certain information to the court in confidence. The Securities and Exchange Commission (SEC) filed a lawsuit against Terraform Labs and its founder, Do Kwon, in February, accusing them of offering and selling unregistered securities and engaging in fraud, resulting in the loss of billions of dollars. The SEC believes that Jump Crypto played a significant role in the collapse of Terraform Labs’ stablecoin, TerraUSD (UST).

The court’s decision grants discretion to Judge Jed S. Rakoff, allowing for the potential public disclosure of the filings submitted by Jump Crypto in the future. However, the court will inform Jump Crypto’s legal team in advance if it decides to make the information public, providing them with an opportunity to raise any objections. It is worth noting that Jump Crypto is not a defendant in the case against Terraform Labs, but the SEC holds the belief that the company contributed to the downfall of UST.

According to an October letter from Terraform Labs’ defense, the SEC alleges that in May 2021, when UST deviated from dollar parity, Terraform Labs collaborated with Jump Crypto to artificially boost the price of the failing stablecoin. The SEC further claims that a lack of similar options hindered UST’s recovery during the second depeg in May 2022. In response, Terraform Labs has vehemently denied these allegations, asserting that Jump Crypto’s trading activities did not play a role in UST’s recovery during 2021, and they believe that data will support their claim.

The court’s decision to allow Jump Crypto to submit information in confidence suggests that the SEC views the company as relevant to the case against Terraform Labs. While Jump Crypto may have an opportunity to defend itself and address any allegations, the ruling also indicates that the court may eventually make this information available to the public, potentially exposing Jump Crypto’s role in the UST stablecoin collapse.

The recent ruling in the ongoing SEC case against Terraform Labs grants Jump Crypto the ability to provide confidential information to the court. The decision also allows the court to disclose the filings, provided they notify Jump Crypto’s legal team beforehand. This development suggests that the court considers Jump Crypto’s involvement crucial to the case. As the proceedings unfold, it remains to be seen how this information will impact the outcome of the lawsuit and potentially reveal the extent of Jump Crypto’s role in the collapse of the UST stablecoin.


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